Japan unchanged

  • Kept rate policy unchanged at -0.1%
  • However, signalled that they would respond like other central banks to external risks surrounding narrowing interest rate differentials

Bank of Japan Governor Kuroda said today that he maintained that BoJ policy was committed to addressing continued low inflation.

After announcing that rates would be kept unchanged, forward guidance changed slightly due to the rate cut the US undertook the day previous.

A key takeaway from the statement was that the BoJ would continue to buy bonds that would lead to the yield on the 10 year dropping to 0%.

The deputy governor, Masayoshi Amamiya, said that the BoJ were concerned about global headwinds to growth that could affect the Japanese economy, specifically surrounding China and the UK’s exit from the European Union.

However, Amamiya believes that the US rate cut was a good thing, since if the US economy rebounds, it’s likely that growth effects would be felt in Japan.

The Yen appreciated vs USD in the hours after the speech as shown below.

You can read the official statement here.